MGMT 4513 EXAM CH 1-10 QUESTIONS & VERIFIED
ANSWERS
strategy derived from "strategos" meaning... - Answers - general's knowledge
Top Management Team - Answers - CEO, COO, CFO, CMO, CTO...
strategy - Answers - a set (system) of goal-directed actions to gain and sustain superior
performance relative to competitors
a set - Answers - not a single action but a system of actions
goal-drected - Answers - importance of coherency
actions - Answers - plan + implement
relative to competitors - Answers - competitive advantage
gain AND sustain - Answers - long-term performance
central goal of strategic management - Answers - superior long-run performance
industry - Answers - a set of firms providing similar products or services (nested
concept)
SCP - Answers - Structure, Conduct, Performance
Industry Structure - Answers - Number of buyers and sellers, degree of product
differentiation, barriers to entry, cost structures, vertical integration, alliances
Firm Conduct - Answers - Pricing, Advertising, R&D, Investment in plant and equipment
Performance - Answers - Econ profits, accounting profits (ratios), NPV/DCF, MVA/EVA,
Tobin's Q
SCP published by - Answers - Edward Chamberlin and Joan Robinson, and developed
by Joe Bain
Industry analysis - Answers - systematically examines structural features in an industry.
Aims to predict the potential industry profitability. Provides foundations for various
strategic decisions, entry/exit decisions, strategic positioning
, 5 Forces Framework - Answers - (Rivalry among existing competitors) <- threat of new
entrants, bargaining power of buyers, threat of substitute products or services,
bargaining power of suppliers
Rivalry Intensity - Answers - weak when: industry concentration, industry growth
strong: strategic commitments, exit barriers
Threat of New Entrants - Answers - Weak: Economies of scale, network effects,
customer service, customer switching effects, capital requirements
Strong: other first-move advantages, government policy, retaliation by incumbents
Power of Suppliers - Answers - Weak: Concentrates suppliers, high dependence on
suppliers, high switching costs to focal industry
Strong: differentiated suppliers, Ability of forward integration
Threat of Substitues - Answers - Weak: low switching costs of buyers
Strong: attractive price and performance of substitutes
Power of Buyers - Answers - Weak:
* Concentrated buyers
* high dependence on buyers
* low switching costs to focal industry
Strong:
* standardized product or service
* ability of backward integration
* price sensitive buyers
industry concentration is... - Answers - positively related to industry possibility
Four-Firm Concentration Ratio - Answers - (the market share of the four largest firms in
an industry) is typically used to assess rivalry intensity
- 80~100% High concentration
- 50~80% Moderate concentration
- 0~50% low concentration
Economies of Scale - Answers - decreases in per unity costs as output increases.
Significant when a substantial amount of fixed cots is necessary
corporate level decisions - Answers - entry/exit strategies
business level decisions - Answers - build defenses against competitive forces,
especially a pivotal force that presents the greatest threat
ANSWERS
strategy derived from "strategos" meaning... - Answers - general's knowledge
Top Management Team - Answers - CEO, COO, CFO, CMO, CTO...
strategy - Answers - a set (system) of goal-directed actions to gain and sustain superior
performance relative to competitors
a set - Answers - not a single action but a system of actions
goal-drected - Answers - importance of coherency
actions - Answers - plan + implement
relative to competitors - Answers - competitive advantage
gain AND sustain - Answers - long-term performance
central goal of strategic management - Answers - superior long-run performance
industry - Answers - a set of firms providing similar products or services (nested
concept)
SCP - Answers - Structure, Conduct, Performance
Industry Structure - Answers - Number of buyers and sellers, degree of product
differentiation, barriers to entry, cost structures, vertical integration, alliances
Firm Conduct - Answers - Pricing, Advertising, R&D, Investment in plant and equipment
Performance - Answers - Econ profits, accounting profits (ratios), NPV/DCF, MVA/EVA,
Tobin's Q
SCP published by - Answers - Edward Chamberlin and Joan Robinson, and developed
by Joe Bain
Industry analysis - Answers - systematically examines structural features in an industry.
Aims to predict the potential industry profitability. Provides foundations for various
strategic decisions, entry/exit decisions, strategic positioning
, 5 Forces Framework - Answers - (Rivalry among existing competitors) <- threat of new
entrants, bargaining power of buyers, threat of substitute products or services,
bargaining power of suppliers
Rivalry Intensity - Answers - weak when: industry concentration, industry growth
strong: strategic commitments, exit barriers
Threat of New Entrants - Answers - Weak: Economies of scale, network effects,
customer service, customer switching effects, capital requirements
Strong: other first-move advantages, government policy, retaliation by incumbents
Power of Suppliers - Answers - Weak: Concentrates suppliers, high dependence on
suppliers, high switching costs to focal industry
Strong: differentiated suppliers, Ability of forward integration
Threat of Substitues - Answers - Weak: low switching costs of buyers
Strong: attractive price and performance of substitutes
Power of Buyers - Answers - Weak:
* Concentrated buyers
* high dependence on buyers
* low switching costs to focal industry
Strong:
* standardized product or service
* ability of backward integration
* price sensitive buyers
industry concentration is... - Answers - positively related to industry possibility
Four-Firm Concentration Ratio - Answers - (the market share of the four largest firms in
an industry) is typically used to assess rivalry intensity
- 80~100% High concentration
- 50~80% Moderate concentration
- 0~50% low concentration
Economies of Scale - Answers - decreases in per unity costs as output increases.
Significant when a substantial amount of fixed cots is necessary
corporate level decisions - Answers - entry/exit strategies
business level decisions - Answers - build defenses against competitive forces,
especially a pivotal force that presents the greatest threat
